As I have written elsewhere:
‘The bank had been involved with Storm since 1994, but the transformed Storm was evidently viewed within the bank as a profit bonanza. The CBA fuelled Storm’s fantasy – home loans, margin loans through subsidiary Colonial Geared Investments, and ‘wealth management’ of the loans into index funds through Colonial First State. … The CBA’s desktop ‘VAS’ remote valuation system, introduced in March 2008, gave increasingly generous valuations of client property [albeit vigorously denied by the bank], readily leveraged into a higher margin loan and more fees for Storm. The CBA extended Storm clients’ loan to valuation ratio to an unprecedented 80% plus 10% ‘buffer’, and a unique office outlet was established in Townsville to service Storm business. The Colonial arms even paid for a ‘gala ball’ in Italy in 2008 for the smooching of clients. Such was the success that the CBA yearly raised sales targets of the Storm-servicing cell, including for 2008-09.’
The CBA effectively defaulted the whole Storm apparatus in late 2008 (Storm went into administration on 9 January 2009). It sold many Storm clients’ portfolios without them receiving a margin call (the haggle over who was responsible for the margin calls is an irrelevant diversion). It unilaterally dropped the loan to valuation ratio on Storm loans from 80% to 70% in early December, triggering margin calls to clean out any remaining Storm clients. On 10 December the bank unilaterally shut down all Storm-badged products. Yet, as late as 29 October, the bank lent Storm a further $10.165 million to pay out a debt to Macquarie Bank and ‘provide funding for further acquisitions’ (Ripoll Storm Report, p.200). As the dominant lender, the CBA was ultimately in control of the whole Storm apparatus, indifferent to (benefiting from?) the loose cannon that was the Storm’s modus operandi.
The CBA has (atypically) acknowledged some culpability regarding its involvement, which has performed valuable service in quelling any potential political hostility.